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In 2008, Anita Bell took a job with O’Leary Funds Management, the investment firm co-founded by businessman, television star and now Conservative leadership candidate Kevin O’Leary. Bell was hired as a senior vice-president of sales and syndication, which involved co-ordinating meetings for O’Leary, assisting in raising funds and building relationships with brokers and financial planners. Her work at the firm earned Bell a “special mention” in the acknowledgements section of O’Leary’s first book, Cold Hard Truth, published in 2011. “Anita Bell is my executive in charge of syndication, and she makes a pantload of cash,” O’Leary wrote. He also referred to Bell as his “efficiency expert.”

But in July 2012, Bell was let go from O’Leary Funds. She filed a wrongful dismissal suit against O’Leary and his company, claiming she was terminated without notice or cause. The suit, which sought $940,000, alleged she’d been promised equity in the firm, but it never materialized. The senior vice-president also said she performed myriad personal tasks for O’Leary that were beyond her job description. Bell did everything from arranging O’Leary’s haircuts and personal training sessions to organizing his tax filings and booking more than 130 personal and business flights for him each year, according to her statement of claim. She dealt with the “detention of O’Leary’s private chef after criminal charges.” She arranged “schedules, travel and products for O’Leary’s female companions and girlfriends” while also co-ordinating counselling for O’Leary and his wife. (O’Leary has said that he and his wife were separated for a period of time, but have since reconciled.) In her suit, Bell alleged she had never been compensated for any of these tasks.

In a statement of defence, O’Leary Funds claimed that Bell “exaggerated or misstated the extent of the duties she performed” and that anything she did outside of her job description was completed on a “purely voluntary basis.” No commitment was made regarding equity, the company claimed, and Bell was dismissed as the firm transitioned to a new line of business that she “put little effort” toward developing. The case went to a mediator in 2013 and was settled. (Bell declined to comment.)

O’Leary Funds itself was effectively sold in a deal that closed last year. For O’Leary himself, the company is perhaps a distant memory. These days, he’s focused on winning the race to lead the Conservative Party of Canada, vowing to ultimately defeat Prime Minister Justin Trudeau. O’Leary’s campaign team did not make him available for an interview for this article, citing his “jammed packed” schedule. “Mr. O’Leary insists that we do not, unless it is an emergency, cut into his French lessons,” wrote press secretary Ari Laskin in an email. Through Laskin, O’Leary also declined to respond to a list of questions.

But with no political track record to speak of, O’Leary’s investing venture provides a revealing case study of his skills as a leader and a salesman. His campaign closely mirrors O’Leary Funds, too. O’Leary was just as much a novice at money management as he now is at politics. Where he once touted outsized returns for investors, he’s now promising to grow the Canadian economy at a fast clip. He was accused of being absent during turmoil in the firm, just as his political opponents now notice his time spent away from Canada. And his investment firm was built on his image as a wealthy, successful business person—a reputation now being played to his political advantage.

There’s little subtlety to O’Leary’s public persona, but the story of O’Leary Funds demands some nuance. The company rolled out more than a dozen funds over seven years, concentrating on Canadian, U.S. and global equities and bonds. Performance of the different offerings was uneven; two large funds launched at the company’s peak tumbled by 20 per cent at one point, damaging the nascent firm’s reputation. Later offerings did fare better, but getting a complete picture is tricky, since the O’Leary Funds website and financial statements are no longer online. And while O’Leary often appeared on television to dispense investing wisdom, he never actually managed money for investors. The investment office in Montreal was a high-pressure environment that churned through workers, according to interviews with 10 former employees (most of whom requested anonymity) and three previously unreported employee lawsuits, one of which is ongoing. Former workers describe the culture as “dysfunctional” and “acrimonious.” The primary source of tension was not O’Leary, however. He was only occasionally in the office, spending most of his time on the road promoting the funds and fulfilling his television commitments. The small details of running a business, managing workplace culture and making large investment decisions were not in his purview, according to those who worked at the firm. That day-to-day management fell to his partner in the venture, Connor O’Brien. Former employees say O’Leary remained disengaged even as employees raised concerns. “He could have tried to have a better work environment,” says one former employee. “He probably was doing too many things to really care.”

O’Leary announced the start of his venture, fittingly, on the Business News Network in July 2008. “I need dough and I need dough every month,” he said as part of the unveiling, noting how expensive it was to support his family. His company’s products, however, could provide a reliable monthly yield. O’Leary was already a wealthy man by that point, of course. He had launched a software firm that eventually became The Learning Company, which was sold by O’Leary and his backers for roughly $4 billion to Mattel in 1999. O’Leary was forced out shortly afterward, leaving with $5 million in severance, along with the $5.9 million pocketed by selling the majority of his Mattel stock after the acquisition closed. He later returned to Canada and eventually signed on to CBC’s Dragons’ Den in 2006, cultivating a reputation as a brutally honest capitalist with a penchant for hyperbole. As his celebrity grew, O’Leary launched his fund company. Since he wasn’t a licensed money manager, the TV star needed a partner. A mutual acquaintance connected him to Connor O’Brien, a fellow Montreal-born businessman who had previously operated a private equity shop in New York. The two entrepreneurs launched O’Leary Funds Management as equal partners, with O’Leary taking the chairman title and O’Brien serving as CEO. O’Brien’s small firm, Stanton Asset Management, acted as the portfolio manager for the O’Leary family of funds.

O’Brien handled the day-to-day management and oversaw investing decisions, while O’Leary served as the company spokesman and raised funds. The products were aimed primarily at baby boomers and retirees who desired stability and yield. As such, O’Leary said the funds would invest in safe, dividend-paying securities, and never touch the principal. (The Globe and Mail found in 2012 that the company had, on occasion, paid distributions from the investors’ principal.) O’Leary put some of his own cash into the funds, too, giving Canadians the chance to invest alongside the wealthy businessman they saw on television. How much of his net worth landed in the funds was never made clear.

O’Leary was a tireless promoter, travelling the country to meet with financial advisers and brokers. At one point, O’Leary hosted advisers for lunch at CBC headquarters in Toronto while he was taping Dragons’ Den. The visitors even got to watch “Mr. Wonderful” in action on the set. O’Leary raised hundreds of millions of dollars from Canadians over the first couple of years.

One industry professional who took note of O’Leary’s entry to the investing world was Mark McQueen, the CEO of a Toronto-based specialty finance firm called Wellington Financial. McQueen viewed O’Leary as a television personality—not a serious money manager. On his blog back in 2008, McQueen assembled a hypothetical basic portfolio of dividend-paying, blue-chip stocks to compete against the performance of O’Leary’s first fund, which invested in global equities. McQueen posted detailed updates every few months. By 2014, he boasted his fund was up 94 per cent. O’Leary’s? Just 4.3 per cent.

Back in Montreal at the Stanton office, the employees actually managing the O’Leary funds were frustrated. The portfolio managers constantly butted heads with O’Brien, who also served as chief investment officer. Meanwhile, his wife, Louise Anne Poirier, worked as the chief financial officer. Former employees describe the couple as a hard-working and driven pair who pushed their staff just as hard. They were seen as headstrong and not particularly open to dissenting opinion or prone to compromise. The husband-and-wife dynamic was also difficult for employees to navigate. “If they agreed on something, there’s no chance of ever getting your point across,” says one former employee.

“We encouraged input on many topics from our people and very often followed that input, and generally encouraged a team approach,” O’Brien and Poirier wrote in an email to Maclean’s. “Yet on some topics, final decisions were made by senior management, which is the case in every business.” (The couple also said that “many” of the written questions sent to them by Maclean’s “contain false or misleading information,” but did not specify which ones.)

There are numerous examples of irked former employees. Within weeks of moving from Toronto to Montreal in 2009 to take a job as senior portfolio manager, Rick Brown was questioning his decision. “It was a really, really tough working environment,” he says. For example, O’Brien infuriated portfolio managers in 2012 by changing the internal benchmarks for the funds, which are used to determine performance bonuses. (In simple terms, the more a manager outperforms the TSX, to take one metric, the bigger the potential payout.) Some of the portfolio managers objected, arguing the benchmarks were unrealistic and would make it difficult for them to achieve a decent bonus. O’Brien replaced the benchmarks regardless, and when some of the investment team complained again at a meeting, O’Brien shot back that he made the decision on the weekend while they were likely “playing golf and drinking beer,” according to Brown and another former employee.

For their part, O’Brien and Poirier note that benchmarks were only one measure used to determine bonuses. Further, “they were developed based on input from many team members, which does not fit the story line you are advancing,” they wrote.

Turnover at the firm, which had around 50 employees at its peak, was high. The company went through five different compliance officers between 2009 and 2015, for example. Brown even performed double duty in compliance for a few months when the previous department head quit after about seven months. “Our operations functioned smoothly,” O’Brien and Poirier wrote to Maclean’s.

Layoffs contributed to the churn, too. Stefan Quenneville joined Stanton in 2009 as a senior equity analyst to work on the O’Leary family of funds. According to a lawsuit Quenneville filed later against Stanton, he was “abruptly and abusively” terminated in a phone call in 2011, and was told by O’Brien that the firm was downsizing as a result of difficult market conditions. O’Brien, according to the claim, told Quenneville it would be best if he didn’t make a “fuss” about his termination if he wanted a good reference in the future. Stanton then posted a job opening for a Canadian equity analyst—the same position Quenneville had just been dismissed from. Quenneville claims he was denied adequate severance, and sued Stanton for $949,000, an amount that includes unpaid bonus and equity that he says were promised but never delivered.

In a deposition, O’Brien denied Quenneville’s claims. He added that Quenneville had relocated to Chicago in 2011 and worked from a home office, and that the arrangement wasn’t working out. The case was settled out of court in 2015. (Quenneville declined to comment.) “O’Leary Funds and Stanton combined had over the last nine years many part-time and full-time team members,” O’Brien and Poirier wrote to Maclean’s, while declining to comment on the case specifically. “There is bound to be, from time-to-time, human resources issues that arise.”

There are some who speak positively of the company. “Connor and Kevin were excellent bosses,” says Paul Bassily, who worked as a wholesaler for three years. “It was very demanding, no doubt. But we were well-compensated for it.” Line Deslandes served as chief compliance officer for one year, and was taken aback to find O’Leary was nothing like the ruthless businessman he appeared to be on television. “I was very surprised how nice he is with his employees, and he has very good people skills,” she says. O’Leary’s disposition was all the more surprising given Deslandes’ role as compliance officer, a position that involves keeping everyone in line. “You come up with all this advice and demands, and usually people are annoyed,” she says. “He didn’t really have time to be annoyed. He would do exactly as I say.” Still, Deslandes left after one year. “I didn’t feel like it was going to succeed in the long run.”

While O’Leary managed to raise a massive amount of money from investors initially—the company’s assets totalled more than $1 billion within two years—the performance took a dive in 2011.

That year was a rocky one for markets, with the European Union debt crisis spooking investors and fund managers alike. Former employees say that in the fall, O’Brien, as chief investment officer, opted to hedge most of the funds to shield them from further volatility. (A few portfolio managers pushed to keep their funds unhedged.) Markets then surged—meaning most of the funds were hurt by the pain leading up to that point, but missed an ensuing upswing because of the hedges. O’Leary Funds had closed two blockbuster products earlier in the year: the $191-million Yield Advantaged Convertible Debenture Fund and the $117-million U.S. Strategic Yield Advantaged Fund. Both were hit hard, falling more than 20 per cent. The latter fund returned -23 per cent, according to Bloomberg data, while the S&P 500 Index fell only by 5 per cent. It didn’t recover until late 2013, while the other fund took until 2014.

O’Leary was not involved with investing decisions, but claimed to contribute themes and ideas. He said he picked up insights when he met CEOs and politicians in the green room before television appearances. “The unwritten rule is whatever’s discussed in there, it’s never discussed again,” he told Canadian Business in 2010. “That is where I get my best investment ideas.” Brown and other former employees say that didn’t happen. Instead, O’Leary was known to call the investment desk before television hits to source ideas and opinions.

Some former employees say the brand suffered after the lousy performance of the two huge funds launched in 2011. Others dispute this, pointing to the fact that the company was transitioning to a new line of business around that time. The firm originally sold closed-end funds, which are similar to mutual funds but trade on an exchange like a stock. The business model is tough for an upstart firm, however. To keep growing, a company has to continually roll out new closed-end funds and raise money, which O’Leary Funds had been doing at a breakneck pace. The market for closed-end funds was also declining, according to the company. In the defence filed in Anita Bell’s lawsuit, O’Leary Funds said the market was slowing as early as the end of 2009. The company had been in business for just over a year at that point, suggesting that focusing on closed-end funds was not the most viable long-term strategy.

By 2012, the company had pivoted to traditional, open-end mutual funds. O’Leary Funds continued raising money, but it was not enough to offset the decline in closed-end business. That year, O’Leary said the company had more than $1.5 billion in assets under management. (He told Canadian Business in 2010 his goal was to reach $5 billion within a few years.) By 2015, the asset base had shrunk by 46 per cent to $800 million.

Declining assets generally mean less revenue for investment managers, who earn a percentage based on the value of the investments. In 2014, as the overall value of its assets declined, O’Leary Funds charged new expenses called “administration fees” and “directors fees” to investors, totalling $650,000 across 13 mutual funds. The company’s annual financial statements do not explain why the fees were charged in 2014 and not the year before. “Evolving regulatory disclosure requirements have increased the disclosure in recent years of information about fees in the industry, but there is nothing new nor unusual about our fees and administrative expenses or disclosure practices which are fully compliant with regulatory requirements,” wrote O’Brien and Poirier to Maclean’s.

Meanwhile, the relationship between O’Brien and the investment team did not improve, and the firm lost talent. Brown says he and many other employees told O’Leary about that acrimonious relationship and implored him to intervene. Brown recalls telling O’Leary, “You’ve got to get involved and help fix the situation here or it’s going to implode on you.” O’Leary told Brown it was O’Brien’s job to manage the investment team. While that’s true, Brown says the fact that senior employees were willing to go over O’Brien’s head to O’Leary should have indicated the situation was serious. At one point, a small group of senior employees even floated the idea of replacing O’Brien as CEO of O’Leary Funds with Stephen Crawford, senior vice-president of national sales. O’Leary didn’t pursue the suggestion. (Crawford declined to comment.)

Deslandes says that O’Leary did try to be inclusive, when he was in the office, by inviting people to meetings and seeking to give them more responsibility. “I think he was trying really hard,” she says.

In the end, O’Leary decided to sell. Operating an independent fund company is, in many ways, an unending battle. The established players dominate the investing world, and fund managers need a healthy amount of assets under management to earn enough in fees to stay profitable. “Kevin and I had spoken several times about the fact that consolidation of the independents was both inevitable and logical in the context of managing overhead,” says Brett Wilson, who sat beside O’Leary on Dragons’ Den for years. Wilson also serves as chairman of Canoe Financial, which bills itself as the country’s fastest-growing mutual fund company. In 2015, Wilson called O’Leary to ask if he’d given any further thought to selling. By October, they had finalized a deal for Canoe, which had $3 billion in assets at the time, to purchase the management contracts for the O’Leary family of funds. As part of the deal, the O’Leary name was dropped from funds, and they were rebranded under Canoe. “Kevin had a couple years of bad performance, in terms of underperforming the market. There may have been a little bit of distaste on the part of some investors. But he had $800 million dollars [in assets],” Wilson says. “That’s not chicken feed.”

The sale price was not disclosed, but according to the audio of an internal O’Leary Funds conference call obtained by Maclean’s, Canoe agreed to pay $13.7 million with the possibility of up to $8 million in equity—provided the funds’ assets could grow by another $200 million over the following year. O’Leary vowed on the call to deploy his television fame—by this point, he’d left the Den but was working as a commentator for BNN— to help make that happen. “I’m signing for another year with CTV for one reason: just to keep their brand bannered on BNN everyday,” O’Leary said, referring to Canoe. (As part of the deal, he signed an 18-month part-time consulting contract with Canoe to provide marketing assistance.) O’Leary rallied his sales force on the call. “We want to go get $200 million, and everybody benefits from that,” he said. “We are indifferent on which products we’re selling.” It’s unclear whether the company hit its goal. Listen to O’Leary

By that time, O’Leary and O’Brien had already launched another venture entirely—O’Shares Investments, which provides a handful of ETFs to American investors. (When O’Leary appears as a commentator on CNBC, he’s introduced as the chairman of O’Shares.) The firm currently has $477 million under management, the majority of which is tied up with a single product, the O’Shares FTSE U.S. Quality Dividend ETF. Since inception in 2015, that ETF has returned 21 per cent, outperforming the S&P 500 Index.

He may have a fledgling new company, not to mention a full-scale political campaign, on the go, but O’Leary can’t entirely move on from his former Canadian venture. Last July, a portfolio manager named Steve DiGregorio filed a lawsuit against O’Leary Funds, Stanton Asset Management, and O’Brien and Poirier. O’Leary himself is named as a “mise en cause,” someone who is not the main defendant but could be included if the plaintiff believes it may be necessary down the line to invoke a judgment against that person.

DiGregorio, who joined the company in 2008, claims that O’Leary told him a few months before the Canoe deal was announced that a sale was in the works, and that O’Leary requested he stay with the firm in order to maximize the value of the transaction. O’Leary added that a sale would trigger long-term incentive payments for DiGregorio. At one point, the two met at Bell Media studios before DiGregorio was to appear on television, and O’Leary told him to “put forward his best performance” since the suitor would be watching.

DiGregorio claims he agreed to be terminated by Stanton and join Canoe, provided the move wouldn’t affect his performance bonus and long-term incentive payments. After the transaction, DiGregorio alleges, O’Brien and Poirier opted not to pay him the full amount. He contends in his suit the decision was “unfounded, malicious and completely illegal.” The former employee is seeking $2.45 million, not including damages. (DiGregorio did not respond to requests for comment.)

Last October, O’Leary filed a motion to be removed as a mise en cause, arguing his inclusion amounts to a “mere nuisance” designed to bring his reputation into “disrepute.” The motion downplays his personal stake in the funds themselves. While O’Leary emphasized in his sales pitches that he, too, was an investor, the filing notes his personal stake in the funds transferred to Canoe amounted to less than 1.2 per cent. That’s at least $9.6 million, based on the value of the assets at the time, but it’s unclear whether that’s a small or a large portion of O’Leary’s net worth.

A judge granted O’Leary’s motion in December, while O’Leary Funds remains a defendant. A filing prepared a month later by Stanton and the other defendants, however, highlights O’Leary’s prominent role. “Kevin O’Leary was at all relevant times Chairman of O’Leary Funds and was involved in all material decisions, including with regard to staffing and compensation, including bonus calculations,” according to the document, provided to Maclean’s by O’Brien. “In this context, Kevin O’Leary was interacting directly with [DiGregorio].”

In the filing, Stanton denied DiGregorio’s claims, asserting that the sale to Canoe was not a triggering event for LTIP payments and that DiGregorio is “double counting” in another instance. “The allegations set out in a Mr. DiGregorio’s claim are inconsistent with Stanton’s employee agreements, plans and obligations and they are unmerited and utterly false,” O’Brien and Poirier wrote to Maclean’s. The case is currently making its way through the Superior Court of Quebec.

Despite performance issues at O’Leary Funds initially, at least half of the 20 products the company had on the market at the time of the sale provided total returns in the double-digits before the transfer to Canoe, according to Bloomberg data. One fund even scored industry accolades. The O’Leary Canadian Bond Yield Fund was named the best-performing Canadian fixed-income fund over a three-year period by Thomson Reuters in 2014, scoring an award known as a Lipper. Rick Brown served as the senior portfolio manager for the fund during those three years. He was no longer at the firm to accept the award with the rest of the team, however; he quit the year before to join a competitor, and moved back to Toronto.

Based on his experience, Brown is skeptical about O’Leary’s political motivations and whether he’s truly committed to representing constituents. “I just think he’s continuing to build his brand,” Brown says. “Because he didn’t really care to hear what we had to say, and what our opinions were and what he could have done for us. He just turned a blind eye and said, ‘That’s someone else’s problem.’”

If brand is indeed paramount for O’Leary, he’s surely hoping his entry into politics has a smoother outcome than his fund company. Even O’Leary acknowledged his firm suffered from a negative image around the time he cashed out. “Theoretically, this should solve our brand problem, if there was one,” he said on the conference call with employees to discuss the Canoe deal. “We all seem to feel that’s the case, so that goes away.”

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